The Lower Smackover Brown Dense formation is an unconventional oil reservoir found in southern Arkansas and northern Louisiana. The formation ranges in vertical depths from 8,000 to 11,000 feet and appears to be laterally extensive over a large area ranging in thickness from 300 to 550 feet. Below is a map indicating the company’s general area of interest in the play.The Lower Smackover Brown Dense formation is an Upper Jurassic age, kerogen-rich carbonate source rock found across the Gulf Coast region of the southern United States from Texas to Florida. The company extensively reviewed the Brown Dense across the region and has indications that the right mix of reservoir depth, thickness, porosity, matrix permeability, sealing formations, thermal maturity and oil characteristics are found in the area of Southern Arkansas and Northern Louisiana. This region of Arkansas and Louisiana has produced oil and gas from the Upper Smackover since the 1920s. The Brown Dense formation is the source rock for these Upper Smackover fields. It has the critical properties necessary to be a successful play and compares favorably to other productive oil plays in the United States. However, it has never been exploited with horizontal drilling technology until now.

As of December 31, 2013, Southwestern held approximately 459,321 net undeveloped acres in the area at an average cost of $483 per acre. Southwestern’s leases have an approximate 81% average net revenue interest and an average primary lease term of approximately three years, which may be extended for approximately three to four additional years. As of December 31, 2013, Southwestern had drilled 11 operated wells in the play area, five of which were currently testing or producing, one is waiting on completion and one is drilling. Southwestern continues to analyze its results to date.